Microsoft sends shivers through antivirus market

The stocks of major antivirus software vendors were trading lower Thursday, after Microsoft Corp. announced the release of beta antispyware technology it bought in December and said it would begin giving away an improved tool to remove worms and viruses from its customers’ computers.

Shares of Symantec Corp. were down by more than six percent and shares in rival McAfee Inc. by around four percent in late afternoon trading, following Microsoft’s news. While the free antivirus and virus removal tools are not an immediate threat to the dominance of products from those companies, the releases could signal tougher times ahead for desktop security vendors, as Microsoft uses its size and influence to expand into markets now dominated by those companies, industry experts said.

Mike Nash, corporate vice president of Microsoft’s Security Business & Technology Unit, said that spyware is a major concern for Microsoft customers, who are looking to the company for help. Spyware accounts for more than one third of software program crashes on Windows XP that are reported to the company, he said in a document posted on Microsoft’s Web page.

Microsoft also said that it was releasing a free malicious software removal tool that consolidates earlier software tools that eradicated the Blaster, MyDoom and Sasser worms, and that will be updated each month to detect and remove other threats, as they appear.

Windows customers will be able to receive the malicious code removal tool through Windows Update and the Windows Auto Update features, which connect to more than 112 million Windows XP PCs configured to receive updates automatically, Microsoft said.

A Symantec executive downplayed the significance of the news.

“It’s a natural progression from them, from free removal tools to a consolidated tool,” said Vincent Weafer, senior director of Symantec’s security response group. “There’s nothing dramatically new here. Protection is still the name of the game.”

While Microsoft may be able to clean up systems that have already been infected after major outbreaks of high profile worms and viruses, the tool will not keep the systems on which it runs from getting infected in the first place, and won’t have the breadth of information on viruses, worms, Trojan horse programs and other malicious code as Symantec, he said.

Nash acknowledged as much.

“There’s no way you could substitute this for an (antivirus) product. They have encyclopedias of tens of thousands of worms and viruses and offer detection and removal, but also platform protection,” he said. Microsoft is merely responding to the demands of its customers and product support teams in releasing the detection and removal tool, Nash said. The company is not trying to replace antivirus software, but provide a tool for the two thirds of computer users who don’t use it, he said.

The release of the antispyware software and virus removal tool is consistent with Microsoft’s tradition of using utilities to address pressing issues affecting its customers, but doesn’t pose an immediate threat to antivirus shops, said Pete Lindstrom of Spire Security LLC. “It used to be file compression, and management of RAM. Now it’s security,” he said.

But Microsoft’s announcements Thursday do hurt the growth potential of consumer security software companies, even if they don’t dim their short term prospects, said Mateo Millet, an analyst at Avian Research LLC.

“The desktop market is being defined by other types of products that are added to the (antivirus) bundle. One thing that (Symantec and McAfee) thought would be a real driver was antispyware. Adding it in to their product suites doesn’t make them any more expensive, but it does draw people to those products. If (customers) can get it for free, it decreases the growth possibilities of those … security products,” he said.

Microsoft has been focused on getting the beta antispyware release out and hasn’t decided yet whether it will sell its Windows AntiSpyware product, or give it away, Nash said.

“It’s a hard question — how it will be delivered, whether any of it will be free, or some of it will be free,” he said.

The company also hasn’t decided how closely the antispyware software will be integrated with Windows, for example, whether users could control the Windows AntiSpyware software from the new Windows Security Center in XP Service Pack 2, or whether the antivirus and antispyware products could be bundled and released together in the future.

Nash also declined to comment on a possible release date for the long-promised Microsoft Antivirus product, rumored to be planned for mid-year.

“Microsoft has not announced a schedule,” he said.

Whatever the case, antivirus companies should now be on notice that Microsoft is coming, even if they somehow managed to miss the software giant’s earlier rumblings about entering the security market, said Laura Koetzle, an analyst at Forrester Research Inc.

With Microsoft’s well-established reputation for moving cautiously and methodically into new markets, the announcements Thursday could be the first of many to come, she said.

“Microsoft is doing what it has always done, biting off someone else’s market a piece at a time. They’re remarkably consistent in that behavior,” she said.

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